Customer Service Level 3Understand the Customer Service Environment

Understand the concepts and practices underpinning customer service delivery

Concepts and practices underpinning customer service

Customer service as a competitive tool

What does this mean?

a way in which an organisation meets or beats the service offers of competitors a way an organisation can create support and loyalty and encourage retention

Customer service as a competitive tool:

Customer service is a competitive environment. Many organisations promise a high level of service in order to attract new customers and retain existing ones.

It’s important for organisations to be aware of competitor offers and standards in order to compete in the market place.

Customer service levels can be vital in gaining an advantage over organisations with similar products or service offers.

ACTIVITY: Discuss with the group your organisation and its main competitors.

The Institute of Customer Service carries out bi-annual research to create reports on customer satisfaction in the UK.This can help us understand the link between customer satisfaction and organisational effectivenessOrganisations are placed into a customer satisfaction index (UKCSI), rated on how satisfied their customers are. This is compiled across different sectors through customer surveys.ValueThe value of using customer service as a competitive tool is clear. Competition is increasing, so customer service levels must also increase in order to match or even beat competitor service offers.Customers have more choice: for an organisation to be competitive, service levels must match expectations and needs.

Mapping the customer journeyWhat is the customer journey?

Customer interactions with an organisation From first contact to closure of the transaction The customer experience as a whole

Why should this be mapped? To evaluate the customer experience To identify improvements To monitor standards

The customer journey is the complete sum of experiences that customers go through when interacting with an organisation and brand.A customer journey map is a framework that enables improvement of the customer experience.Customer journey mapping can help to identify how the customer is treated during each contact and how the customer feels towards your organisation at the end of the experience.All organisations will have different types of customer interactions.These must be established in order to begin to map the customer journey.

Customer personas and touchpoints

Touchpoints and personas must be established to begin to see what customers want and the types of interaction a customer has with an organisation. A touchpoint is a marker to show where a customer interacts with an organisation – the point at which the two parties come together.

The journey map can help to structure this process and clearly identify the quality of each interaction. This is best done through customer research and feedback. This data will be then be used in the customer journey map. This element is known as creating ‘personas’.

Here is an example of a customer journey map with touchpoints

This customer journey map isn’t about the goals of an organisation; it’s about the goals of a customer at each stage.

Identify the customer questions at each stage and identify their goal.

For example:

For each different phase, you will see gaps between what the needs and goals of customers are and what is currently available to them. This will begin to highlight what improvements are required.

In summary, an effective journey map will identify:

what customers need how the organisation can help them succeed where the organisation should be investing more to provide a better customer experience.

The service-profit chain

The service-profit chain is a theory and business model evolved by a group of researchers from Harvard University. They have proved that there is a direct financial link between superior service experiences, customer loyalty, and financial performance (profit and growth).

The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity.

Understand the customer service environment

Measuring organisational effectiveness

It is vital for all organisations to measure how effective they are in order to meet customer needs, increase business, retain customers and to maintain market share.

An organisation that does not measure its effectiveness cannot develop, grow or maintain standards in any delivery area.

Organisational effectiveness

There are many methods that can be used to formally measure the effectiveness of an organisation. The methods can differ depending on:

the size of organisation the sector of organisation organisational priorities

Performance review

Generally, a performance appraisal is conducted to clarify job expectations, set goals for improvement of weaknesses and reward accomplishments and overall performance.

When conducted properly, appraisals serve that purpose by showing employees how to improve their performance, setting goals for employees, and helping managers to assess effectiveness.

Key Performance Indicators (KPIs)

KPIs are formal, pre-defined measurements of effectiveness. They are quantifiable – all KPIs must be able to be reduced to a number.

KPIs can be used to evaluate the effectiveness of an individual, a team or a particular activity. They differ between organisations and activities and are then monitored to evaluate effectiveness. KPIs should clearly link to the strategic objectives of the organisation. They include:

Target setting

Data analysis Measurement against objectives Sales/performance targets Performance targets are a simple way to monitor the performance of an individual or team. Targets are set based on several factors, which could include past performance and

organisational objectives. Targets should be monitored to assess effectiveness and adjusted to reflect changing factors

within an organisation.

The fundamental principles of target setting are outlined in the SMART method

Competitor benchmarking

This is the process of comparing organisational performance and practices to those of competitors.

This can be challenging, as specific data about competitors can be difficult to locate. A more simple way of benchmarking would be to compare service offers, staff competence and other, more obvious factors.

Some organisations publish their financial records which can also be a beneficial benchmarking exercise.

Data analysis

This is vital in monitoring effectiveness. There are numerous types of data that can analysed to identify trends, shortfalls, good

practice and business risks. These vary between organisations but can include:

Customer satisfaction data

Profit reports Overheads Staff costs

ACTIVITY: What methods work best in different environments?

Methods of identifying service failures

Analysis of complaints Customer feedback Market research Sales figures Returns Staff monitoring Mystery shoppers Customer focus groups

Analysis of complaints Complaint data should be analysed in order to identify service trends, customer expectations

and other service failures. This can be both quantitative and qualitative data.Customer feedback

This feedback can be in any form – formal or informal. Customer comments or suggestions do not have be complaints.

Market research This is a useful indication of customer wants, needs and expectations and can be matched to

the current service offer.Sales figures

This quantitative data can highlight variances from expected or required sales in order to identify failures.

Product returns Can be used to identify if the same products are being returned consistently and for the

same reasons.Staff monitoring

As previously identified Mystery shoppers

These undercover quality assurance officers can check service from a customer’s point of view, giving valuable insight into how the organisation delivers its offer.

Customer focus groups This is a qualitative way of gaining feedback into what customers think about an

organisation and how they could improve. New ideas can be generated and highlighted.

Understand the relationship between customer service and a brand

A brand is used by an organisation to differentiate themselves from others.

In large, international organisations a successful brand is usually instantly recognisable.

In smaller organisations the brand is built around the service and value provided.

A brand is also a specific combination of logo, words, type font, design, colours, personality, price, service, etc.

A brand is vital to successful customer service as competition in the market grows.

A brand is a promise. With a brand, you set customer expectations. When someone buys the product or service, they count on those expectations to be fulfilled.

Poor levels of service and value can negatively affect a brand. A brand can also be negatively affected by word of mouth. A successful brand can take years to build up and much less time to knock down in the event

of a damaged reputation. There are several examples of high profile organisations that have suffered financial losses

due to negative brand association. In these instances the brand loses credibility which in turn, reduces customer trust.

Understand the structure of customer service

Customer service models and standards A customer service model is the way in which an organisation decides to deliver its customer

service and the outcomes on which it is focused. A customer service standard defines the level of service that can be expected. All staff must

adhere to this standard. The customer service standards of an organisation can often be found in a Customer Charter.

Sales-focused model

This model is focused on the amount of sales completed. The main aim of the organisation is to always secure a sale and therefore a financial reward. This model focuses heavily on quantitative outcomes and the success of the organisation is measured on this.

Customer-focused model

This model makes the customer the most important element of the organisation. Organisations that take this approach can be expected to have increased repeat customers and commit time and money to improving services and products in order to satisfy customers.

Customer experience model

Organisations that use this model are focused on improving the customer experience through the development and implementation of new and evolving products and services. The customer journey is the main purpose.

Price/convenience model

An organisation that uses this model is seen as offering cheap products and services in central, easy to access locations. They usually offer a ‘no-frills’ service for customers who wish to have minimal contact with an organisation

Customer service standards

Customer service standards often refer to one or more of the following elements:

Timeliness Accuracy Appropriateness Standards for timeliness

For example:

Standards for accuracy

For example:

Organisations should correctly process orders Information given should be correct Services should be correct and relevant Standards for appropriateness

For example:

Responses to enquiries should cover all areas requested by the customer.

The level and content of the response should be appropriate to the situation. Without this an organisation is not meeting the needs and expectations of the customer.

How does customer service affect operational areas of an organisation?

Different organisations have many different operational areas depending on their size and structure. Here’s an example:

Customer service can affect all other areas of operation – for example:

If a customer service offer promises next day delivery, this can affect distribution. If a customer service transaction involves processing an order, this can affect the

administration function. Processes and operations are fundamentally linked and each operation can affect the other.

This principle forms the basis of the customer service supply chain.

Customer service also affects the continuous development of an organisation.

Continuous development is an ongoing effort to improve products, services and service offer including;

Reviewing performance Target setting Implementing changes Analysing feedback

Reviewing performance Reviewing the customer service performance of teams and individuals can help to identify

development activities and needs to ensure the organisation is consistently providing a high-quality service.

Target setting Target setting can be used to improve the performance of an organisation. Targets should be

SMART and adaptable to individual needs and priorities. Targets can help with development by tracking performance.

Implementing changes Implementing a change can assist continuous development by ensuring an organisation

updates and adapts its service offers in line with customer needs and expectations.Analysing feedback

Feedback analysis is vital in continuous development to ensure an organisation listens to customer views and is able to consistently offer what customers require.

Implementing changes Implementing a change can assist continuous development by ensuring an organisation

updates and adapts its service offers in line with customer needs and expectations.Analysing feedback

Feedback analysis is vital in continuous development to ensure an organisation listens to customer views and is able to consistently offer what customers require.

The costs and benefits of customer service

Good customer service is vital to ensure an organisation is successful. The benefits are many but there are also costs to an organisation to committing to a high-

quality service. Costs are not just related to financial outlay; poor customer service can cost reputation,

customer loyalty and ultimately market share. The benefits of good customer service are easy to see in customer retention, repeat

business and customer feedback. The cost of customer service It’s not always about budget. It is not always the organisations with the highest budgets who have the ability to maintain

customer satisfaction to the highest levels. In a recent customer satisfaction survey carried out by Which?, it was shown that in a survey

of UK energy suppliers the largest, most-profitable organisations were not among the ones scoring the highest in the survey.

Customer service costs to an organisation can be complex and multi-faceted.

Source: http://www.which.co.uk/switch/energy-suppliers/energy-companies-rated

The cost of poor customer service – loyalty

If customers are not happy with service, there is a lot of research to show that they will go elsewhere.

The cost of poor customer service – word of mouth/reputation

A recent study in the USA gives very clear indications of the cost of poor service when focusing on word of mouth.

A dissatisfied customer will tell between 9–15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people. Negative interactions with a business are spread to twice as many people as positive ones. People are twice as likely to talk about bad customer service experiences than they are to

talk about good experiences. 67% of people spend money after getting recommendations from their friends on online

communities like Facebook and Twitter. Happy customers who get their issue resolved tell about 4–6 people about their experience.

The cost of good customer service

Investing in customer service can cost money – for example:

Staff/recruitment costs Training costs Product development

Outgoings and financial investment should be directed to areas with the most benefit to customers and ultimately resulting in an increase in business. Organisations carry out audits, reviews and evaluations to identify which areas will benefit from additional investment.

Organisational values

An organisational value is ‘a belief that a specific mode of conduct is preferable to an opposite or contrary mode of conduct’.

They are the framework for how an organisation operates.

Values are different within each organisation: they might relate to teamwork, honesty, commitment or excellence. Some organisations pride themselves on their core values and often make these a focus of their service offer. This creates an image of how the customer sees the organisation and what they can expect.

As customers, this is now what we expect from the organisation. If they do not deliver their promised offer communicated through their core values then our expectations will not be met.

This is an expectation that has been set by the organisation themselves through the creation of their core values.

The implications of legislation on customer service delivery

Legislation is the most important restriction placed on organisations.

There are many laws that effect the delivery of customer service. Breach of these laws can result in fines, compensation, loss of reputation and even imprisonment.

Consumer Credit Act 2006 Misrepresentation Act 1967 Sale of Goods Act 1979 and 2002 Consumer Protection Act 1987 Trades Descriptions Act 1968 Data Protection Act 1998

Consumer Credit Act 2006 This act regulates consumer credit and covers areas such as: eligibility for credit schemes,

cooling off periods, content of credit agreements and calculation of APR.Misrepresentation Act 1967

This act exists to protect consumers from false or fraudulent claims that induce you into buying something, or entering into a contract and allows you to claim damages in the case of fraudulent misrepresentation.

Sale of Goods Act 1979/2002 This act relates to the pricing and quality of products and/or service supplied to a consumer.

Goods and services should be fit for purpose, of good quality and as described. Services must be provided to an acceptable standard and at a reasonable price (if the price

was not agreed in advance).Consumer Protection Act 1987

This act protects the public by prohibiting the manufacture and supply of unsafe goods making the manufacturer or seller of a defective product responsible for damage it causes. allowing local councils to seize unsafe goods and suspend the sale of suspected unsafe

goods. prohibiting misleading price indications.

Trades Descriptions Act 1968 This act prohibits organisations from applying a false trade description to any goods. It also

covers the supply or offer to supply any goods to which a false trade description has been applied.

Organisations are not allowed to make certain kinds of false statement about the provision of any services, facilities or accommodation.

This law is enforced by trading standards officers.Data Protection ActThis act relates to the confidentiality of information and who has access to it. It has eight principles.All data must:

Be obtained lawfully and fairly Kept no longer than necessary Obtained with the consent of the individual Be available only to authorised personnel Be adequate, relevant and not excessive Be treated confidentially Be accurate and up to date Not transferred to any place without adequate protection.